SCR89

WHEREAS, the availability of affordable housing has reached a state of crisis for Hawaii residents, where the average statewide median price of a single-family and multi-family dwelling unit is over $600,000 and $300,000, respectively; and

WHEREAS, according to the United States Census Bureau 2006 American Community Survey, forty-six per cent of mortgaged home owners and fifty-two per cent of renters in Hawaii pay thirty per cent or more of their income on housing costs; and

WHEREAS, over the years, leasehold condominium and co‑operative housing units have remained a relatively affordable housing option for thousands of Hawaii residents; and

WHEREAS, in 2007, the first long-term leasehold agreements for approximately 18,700 condominium and co-operative housing units statewide began to expire; and

WHEREAS, these 18,700 leasehold units are situated in approximately 540 condominium and co-operative housing projects throughout the State, impacting over 63,000 units that are owner-occupied, leased, or rented; and

WHEREAS, within the next thirty years, the expiration of existing leases for over 8,000 leasehold condominium and co‑operative housing units are set to result in reversion of these units to the fee owner, potentially leaving thousands of individuals, many of whom are elderly, and their families without a place to live; and

WHEREAS, Act 307, Session Laws of Hawaii 1967, also known as the Land Reform Act of 1967, allowed lessees of long-term leasehold interests in single-family residential development tracts to purchase the fee interest of their residential lots in a condemnation process whereby the State of Hawaii condemned the fee interest, paid the fee owner fair compensation, and then sold the fee interest to the leasehold homeowner; and

WHEREAS, in 1984, after years of contentious litigation, mandatory leasehold conversion under the Land Reform Act of 1967 was upheld by the United States Supreme Court in Hawaii Housing Authority v. Midkiff; and

WHEREAS, shortly thereafter in 1985, the Supreme Court of Hawaii decided in Hawaii Housing Authority v. Lyman that the Land Reform Act of 1967 did not violate the State Constitution; and

WHEREAS, in the last twenty-five years, the number of leasehold single-family residences fell from a high of approximately twenty-eight thousand units to four thousand six hundred units; and

WHEREAS, in 1991, the Honolulu City Council adopted ordinance 91-95, codified as chapter 38, Revised Ordinances of Honolulu, which granted multi-family residential leaseholders the right to purchase the fee simple interest to their units in a condemnation procedure similar to the Land Reform Act of 1967, but this ordinance was repealed in 2005; and

WHEREAS, Hawaii, Kauai, and Maui counties currently do not have leasehold conversion provisions for multi-family units, leaving the State without a mechanism to address the expiration of leasehold condominium and co-operative housing units; and

WHEREAS, over the next thirty years, about half of Hawaii's remaining 18,700 long-term leasehold condominium units are set to revert to their fee owner, which will potentially leave thousands of Hawaii residents in need of alternative housing; and

WHEREAS, the displacement of hundreds of lessees each year could dramatically impact the already existing affordable housing crisis in Hawaii; and

WHEREAS, the State of Hawaii must anticipate the short- and long-term impact of leasehold conversion of condominium and co‑operative housing units on Hawaii's affordable housing stock available for Hawaii’s residents; now, therefore,

BE IT RESOLVED by the Senate of the Twenty-fourth Legislature of the State of Hawaii, Regular Session of 2008, the House of Representatives concurring, that the Auditor is requested to examine the issue of the upcoming condominium and co‑operative housing project lease expirations and its potential impact on the availability of replacement and affordable housing for Hawaii residents, including an examination of the current status of residential leaseholds in condominiums and co‑operative housing projects in the State; and

BE IT FURTHER RESOLVED that the Auditor is requested to provide recommendations on potential mitigation of the reduction in affordable housing stock due to lease expirations, including the recommendation of any potential legislation; and

BE IT FURTHER RESOLVED that the Auditor shall submit a report to the Legislature including findings and recommendations no later than twenty days prior to the convening of the Regular Session of 2009; and

BE IT FURTHER RESOLVED that certified copies of this Concurrent Resolution be transmitted to the Auditor, Governor, and the Director of the Hawaii Housing Finance & Development Corporation.

	OFFERED BY:	_____________________________

Report Title:

Leasehold Conversion; Affordable Housing; Auditor Report

THE SENATE	S.C.R. NO.	89
TWENTY-FOURTH LEGISLATURE, 2008
STATE OF HAWAII